What is Subrogation?

Subrogation is intended to give relief when someone is required to pay a legal obligation that ought to be met, either wholly or partially, by another. Subrogation generally is invoked when one person has satisfied the obligations of another. The doctrine of subrogation is premised on the idea that no one should be unfairly enriched by someone else’s loss. In a general sense, a party subrogated acquires all the rights and securities that the creditor has against the debtor who is primarily liable. He or she is fully substituted for, or placed in the shoes of, the creditor and, in addition to claiming all the incidents of the principal obligation and all securities that may have been placed in the hands of the creditor, may enforce the obligation even though it would be deemed discharged at law. As a result of equitable subrogation, the party discharging the debt stands in the shoes of the person whose claims have been discharged and thus succeeds to the right and priorities of the original creditor.

When is a Subrogation Claim Filed?

When an insurance company pays out a claim to the insured, subrogation is a possible avenue for the insurer to recover those funds from the third party who caused the loss. Examples include:

  • Water Damage Claims Occurring in Condominiums and Co-Ops
  • Car Accident Pay-Outs

Types of Subrogation

There are two types of subrogation in Florida- 1.) equitable, and 2.) legal or conventional. Conventional subrogation turns on whether there is a lawful contract and takes place when someone who has no relation or interest to the matter pays the debt of another and is entitled by agreement to the remedies and rights of the original creditor. In other words, conventional subrogation is essentially an agreement that the party paying the debt will be subrogated to the rights of the original creditor.

Defenses to Subrogation Claims

The following defenses may be applicable to subrogation claims:

No Greater Rights: The subrogee may only enforce such rights as the subrogor could enforce, and those rights must be exercised under the same conditions and limitations as were binding on the subrogor. Therefore, the subrogee can be subrogated to no greater rights than those possessed by the subrogor.

Settlement and Release: Since the subrogee stands in the shoes of the injured party and acquires his rights and is limited by any impediment in the injured’ s party claim, the issue has arisen concerning the effect a release from the injured party to the tortfeasor has on the rights of the subrogee. As a general rule, if the injured party settled with the tortfeasor and issued him a release from liability, the party subrogated to the rights of the injured party is barred by that release. However, the courts have adopted an exception to this general rule which provides that a settlement and release executed by the insured cannot act as a bar to an action for subrogation by the insurer against the tortfeasor if, prior to the settlement and release, the tortfeasor knew of the insurer’s perfected subrogation rights.

Statute of Limitations: The statute of limitations in a claim based on equitable subrogation begins to run when payment is made. The statute of limitations in a claim based on contractual subrogation, however, begins to run on the date the injury occurs to the injured party.

Additional affirmative defenses may include an anti-subrogation rule, a waiver, lack of capacity, lack of real party in interest, repose, the made whole rule, any exculpatory and limitation of liability clauses, contributory and comparative negligence, assumption of the risk, last clear chance, and apportionment of fault.

Additionally, a defendant sued for subrogation will want to explore whether there is an assignment from the insured, whether the condominium declaration is relevant (in subrogation claims stemming from water damage insurance pay outs), if any inspection reports exist, photos, videos, and whether there are any specific facts that the Plaintiff is in possession of that may tend to prove or disprove the defendant’s negligence. If a subrogation claim is not settled through negotiation, the claim and damages sought must be proven up at a jury trial. Resolution of subrogation claims often comes from the knowledge that the law firms prosecuting subrogation claims ordinarily do not have a lot of trial practice or real desire to take the case to trial.

Don’t Face a Subrogation Claim Alone

Mr. Pascale is Miami business lawyer who is skilled at determining the strengths and weaknesses of your case and giving you knowledgeable advice. Mr. Pascale’s in-depth knowledge of subrogation law combined with his experience in the defense of subrogation claims rooted in negligence may result in a strategic advantage in resolving a claim filed against you. Call Mr. Pascale directly at (877) 667-1211 or contact him online today to schedule a case evaluation.

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